Wednesday, September 22, 2010

In her book, The Nature of Economies, Jane Jacobs writes that economic development is not just expansion, but differentiation emerging from generality, much like evolutionary or embryological development in nature. Moreover, she says, differentiation depends on codevelopment—no entity, natural or economic, evolves in isolation.

Brands don’t develop in isolation, either. They result from the interaction of thousands of people over a long period of time. Branding requires not only the work of executives and marketing people who manage the brand, but an ever-changing roster of strategy consultants, design firms, advertising agencies, research companies, PR firms, industrial designers, environmental designers, and so on. It also requires the valuable contributions of employees, suppliers, distributors, partners, stockholders, and customers—an entire branding community.

It takes a village to build a brand.Building a brand today is a little like building a cathedral during the Renaissance. It took hundreds of craftsmen scores of years, even generations, to complete a major edifice. Each craftsman added his own piece to the project—a carving, a window, a fresco, a dome—always keeping an eye on the total effect. Like yesterday’s cathedrals, many of today’s brands are too large and too complex to be managed by one person or one department. They require teams of specialists, sharing ideas and coordinating the efforts across a creative network.

Management guru Peter Drucker maintains that the most important shift in business today is from “ownership” to “partnership,” and from “individual tasks” to “collaboration.”The successful company is not the one with the most brains, he suggests, but the most brains acting in concert. Brand managers and communication firms are responding to this new challenge in a number of interesting ways.

The new collaboratives.Today there are three basic models for managing brand collaboration: 1) outsourcing the brand to a one-stop shop, 2) outsourcing it to a brand agency, and 3) stewarding the brand internally with an integrated marketing team. All three models are forward-thinking responses to the problem, because they recognize brand as a network activity. Let’s examine them one at a time.

The first model, the one-stop shop, has its roots in early 20th-century branding, when companies routinely consigned large portions of their communications to a single firm, typically an advertising agency. The advertising agency would conduct research, develop strategy, create campaigns, and measure the results. The main benefit was efficiency, since one person within the client company could direct the entire brand effort. As branding has grown more complex, so has the one-stop shop. Today’s one-stop is either a single multi-disciplinary firm, or a holding company with a collection of specialist firms. The advantages of the one-stop shop are an ability to unify a message across media, and ease of management for the client. The drawbacks are that the various disciplines are not usually the best of breed, and, in effect, the company cedes stewardship of the brand to the one-stop shop.

The second model, the brand agency, is a variation of the one-stop concept. With this model the client works with a lead agency (an advertising agency, design firm, PR firm, strategy firm, or other brand firm), which helps assemble a teamof specialist firms to work on the brand. The brand agency leads the project, and may even act as a contractor, paying the other firms as subcontractors. The advantages of this model are the ability to unify a message across media, and the freedom to work with best-of-breed specialists. A drawback is that stewardship of the brand still resides more with the brand agency than with the client company.

The third model, the integrated marketing team, bears little resemblance to the traditional outsourcing model. It sees branding as a continuous network activity that needs to be controlled from within the company. In this model, best-of-breed specialist firms are selected to work alongside internal marketing people on a virtual “superteam,” which is then “coached” by the company’s design manager. The advantages of this model are the ability to unify a message across media, the freedom to work with best-of-breed specialists, plus internal stewardship. This last benefit is important, because it means that brand knowledge can accrue to the company, instead of vanishing through a revolving door with the last firm to work on it. A drawback of an integrated marketing team is that it requires a strong internal team to run it.

Of course, while these three types of collaboratives seem tidy in print, they’re messier in practice. Companies are mixing and matching aspects of all three models as they grope their way to a new collaborative paradigm. Still others are behind the curve, unaware that there’s a revolution afoot.

Hooray for Hollywood.According to a recent McKinsey report, the next economy will see a significant rise in network organizations—groups of “unbundled” companies cooperating across the value chain to deliver products and services to customers. By owning fewer assets and leveraging the resources of partner companies, these network orchestrators require less capital, return higher revenues per employee, and spread the risks of a volatile market across the network.

The network organization isn’t new; a successful model of unbundling has existed for years.It’s called Hollywood.A half-century ago, the major Hollywood studios not only owned the soundstages and backlots necessary for their movies, but also the producers, directors, writers, actors, cinematographers, musicians, PR specialists, and distributors. Some even built theater chains for the exclusive use of their own properties. As the dream machines cranked out hundreds of look-alike movies to feed their growing overhead, movie-making began to slide from craft to commodity. The independents soon learned how to end-run the mega-studios by producing high-quality “little” films and low-budget B-movies.

What happened next? The big studios learned from the small ones, and began unbundling their vertically integrated companies. By switching to a network model, the studios could avail themselves of the best talent for each project, thereby creating unique products and shedding unnecessary overhead. In reversing the trend toward commoditization, they encouraged the growth of an artisan community, not unlike those that grew up around the cathedrals of Europe. Like the cathedral-builders, Hollywood specialists don’t see themselves as technicians, but as craftspeople working in a creative network.

Hollywood isn’t unique, just more evolved than other industries. In the 1980s, Silicon Valley faced a similar challenge when Japan threatened to walk away with its franchise in microchips, duplicating their features and undercutting prices. Valley companies quickly discovered the value of open collaboration, producing ever-more-advanced systems and components that kept them one step ahead of the copycats.

In the mid-1990s I was privileged to be a member of the superteam that launched Netscape Navigator, along with related products and services. My firm developed the Navigator icon and the retail package, while other firms, including an advertising agency, a web design firm, a PR group, and an exhibit design firm, worked on their own piecesto help launch the product at warp speed. This example of “parallel processing” showed how collaboration can yield not only quality but quickness.

Netscape was formed in 1994, went public in 1995, and was absorbed into AOL by 1999. During this short period, it launched more than a dozen products and changed the direction of computing. Thanks to the Hollywood model, design managers are now learning how to assemble top-notch teams of specialists, inspire them to work together productively—even joyfully—then disband them when the project’s over, only to reassemble them in a different configuration for the next project. The lesson hasn’t been lost on other industries. Soon every knowledge-based business will adopt some version of the Hollywood model, and, years from now, many will undoubtedly agree with Noel Coward’s statement that “work was more fun than fun.

Here is a very successful presentation from slideshare inspired by this book.